“For all the doom and gloom that’s in the markets right now, companies themselves still seem pretty upbeat on their own progress,” said James Knightley, chief economist at ING, a bank. “It sort of dampens the near-term fear that we’re heading into an impending recession.”
A strong hiring report for June has assuaged fears that the U.S. economy might be on the cusp of a recession — and highlighted the resilience of the nation’s job market, reports AP.
Yet the figures the government released Friday also spotlighted the sharp divide between the healthy labor market and the rest of the economy: Inflation has soared to 40-year highs, consumers are increasingly gloomy, home sales and manufacturing are weakening and the economy might actually have shrunk for the past six months.
The contrasting picture suggests an economy at a crossroads. Strong hiring and wage growth could help stave off recession. Or, conversely, painful inflation and steadily higher borrowing rates engineered by the Federal Reserve could discourage consumer and business spending and weaken growth, eventually leading businesses to scale back hiring or even cut jobs.
For now, at least, the latest jobs data from the Labor Department shows that many businesses still want to keep hiring. Employers added 372,000 jobs in June, a surprisingly robust gain and in line with the pace of the previous two months. Economists had expected job growth to slow sharply last month given the broader signs of economic weakness.
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